NEW YORK ( TheStreet) -- Tenet Healthcare (NYSE: THC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally weak debt management, disappointing return on equity, poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 103.3% when compared to the same quarter one year ago, falling from $61.00 million to -$2.00 million.
- The debt-to-equity ratio is very high at 4.04 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, THC maintains a poor quick ratio of 0.76, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, TENET HEALTHCARE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TENET HEALTHCARE CORP is currently extremely low, coming in at 12.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.10% trails that of the industry average.
- In its most recent trading session, THC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
-- Written by a member of TheStreet Ratings Staff